Forex Trading

Author Dan on December 21st, 2005

These charts show the growth of my two demo Forex accounts (more info about Forex trading here on wikipedia). The strategies are similar but the methods are different. Both strategies are used for all 4 majors plus USDCAD, AUDUSD, EURCHF, GBPCHF, EURJPY, and GBPJPY.

The North Finance account started at $10,000. The strategy started as watching the market and follow short term trends. I watched a 5 min chart. I tried to enter near the middle of the trend. Every trade had a take profit of 10 pips and a stoploss of 20 pips. Trades were taken during the London/New York session overlap. If I had a 1%+ gain I either stop for the day or keep my eye on the market for a great entry.

This strategy changed to using a SuperWoodie CCI indicator on a 1 hour chart. Entries are taken using trend line crosses drawn on the indicator. A stoploss of 20-30 pips is used. This has been a much more successful strategy. My monthly goal is still 12-15% growth.

The Oanda account started at $100,000. Oanda offers exotic options they call FXBoxOption. My trading strategy is similar to the NF account in that I watch the market and look for trends. I then draw a miss box above or below the trend, depending on the direction. The box is almost always as close as possible to the current bar and only 5-10 min long. One of the reasons for drawing boxes for such short periods is that you can take advantage of a slow in volitility. The equation used to calculate box option return uses a lagging volitility indicator. If you draw a box at the end of a high volitility period the return will be higher with lower risk. 2% of the account is risked on each trade. I will only draw boxes that return ~0.2% of the account (or 10% of the amount risked). Trades will be entered at any time of the day when a box with a high risk/return ration can be drawn. The daily goal is 1% with a monthly return of 10%.

Why are daily returns much higher than monthly? There will be losing days. The monthly targets include those potential losses.